Buru looking to accelerated development of Ungani with rights issue
Buru Energy has advised that it will undertake a one-for-five non-renounceable entitlement offer (rights issue) to raise up to approximately $10.2 MM before costs to accelerate the development of the Ungani oil field in the Western Australian Canning Basin.
Buru stated that funds raised by the rights issue are proposed to be used as part of funding for a “multi-phase development program” at Ungani.
“This program is aimed at increasing the field’s production capacity and recoverable oil resources,” Buru stated. “The program has already started with the recent recommencement of oil production from Ungani, with production from the existing two wells being progressively increased towards the initial target of 1,250 bopd.
“Substantial progress has also been made on the next phase (phase 2) of the development program. This phase includes installation of artificial lift in the two existing producing wells and installation of additional storage tanks. This work is planned for completion later this year and is aimed at enhancing the production capacity of the existing wells. This phase of the program will be funded from the company’s existing cash reserves.”
Buru stated that the funds raised will be used to accelerate phase 3 of the program, consisting of the drilling of two additional wells with an estimated drilling cost of $9.5 MM, planned for the fourth quarter of this year, the Ungani-4 vertical development well and a sidetrack of the existing Ungani-3 well, with the aim of the wells being to increase the field’s production capacity to a target of 3,000 bopd, as well as confirming and potentially increasing the field’s recoverable oil resource base.
“We have recently completed a series of transactions that have put Buru on an exciting new path towards potential growth and value realisation in the short-to-medium term,” Buru Executive Chairman Eric Streitberg commented.
“Following the asset swap transaction with Mitsubishi that has delivered the company 100% ownership of the Ungani oil field and the surrounding conventional oil exploration acreage, the company’s immediate focus is the accelerated development of the Ungani field. The company requires additional capital to undertake this development program in a timely manner.
“Whilst there are several possible ways to access additional funding, the board considers an attractively priced rights issue as the fairest way to allow all shareholders to participate in the forward program. Shareholders are encouraged to review the company’s recently released corporate presentations that contain further details of the company’s forward strategy for both the development of Ungani and for Buru’s extensive Canning Basin oil and gas exploration prospect portfolio.”